Target Beats on Q4 Earnings, Issues Cautious View on Tariff Concerns

Target Corporation TGT reported fourth-quarter fiscal 2024 results, with the top and bottom lines surpassing the Zacks Consensus Estimate. Comparable sales growth also accelerated from the preceding quarter. Better-than-expected results were driven by a stellar performance in beauty, apparel, entertainment, sporting goods and toys. However, the Minneapolis-based retailer issued a cautious first-quarter fiscal 2025 view. Target anticipates significant year-over-year profit pressure in the first quarter compared to the rest of the year owing to ongoing consumer uncertainty, a slight decline in February net sales, tariff concerns and the expected timing of certain expenses throughout the fiscal year.The company achieved record sales during Valentine’s Day in February, but overall monthly performance was subdued. Unseasonably cold weather across the United States impacted apparel sales, while weakening consumer confidence led to softer demand for discretionary items.Target’s Quarterly Performance: Key Metrics and InsightsTarget reported adjusted earnings of $2.41 per share, which beat the Zacks Consensus Estimate of $2.25 but declined from $2.98 reported in the year-ago period.See the Zacks Earnings Calendar to stay ahead of market-making news.Target Corporation Price, Consensus and EPS Surprise Target Corporation price-consensus-eps-surprise-chart | Target Corporation QuoteThe big-box retailer generated total revenues of $30,915 million, which came ahead of the Zacks Consensus Estimate of $30,766 million. However, the metric fell 3.1% on a year-over-year basis. We note that merchandise sales declined 3.3% to $30,428 million. Meanwhile, comparable sales rose 1.5% in the fourth quarter, following a 0.3% increase in the preceding quarter. The metric reflected a decline of 0.5% in comparable store sales but an increase of 8.7% in comparable digital sales.While traffic improved by 2.1%, the average transaction amount declined by 0.6%. Target highlighted that comparable sales trends in apparel and hardlines increased by nearly four percentage points compared with the third quarter.The gross margin contracted 40 basis points to 26.2%. This can be attributed to higher digital fulfillment and supply-chain costs as well as higher promotional and clearance markdown rates. These were partly mitigated by the net benefit of other merchandising activities. The operating margin shrunk to 4.7% from 5.8% in the corresponding period last year.Target’s Financial Health SnapshotThis Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $4,762 million, long-term debt and other borrowings of $14,304 million and shareholders’ investment of $14,666 million. During the quarter, Target paid out dividends of $513 million.Target repurchased 3.7 million shares worth $506 million during the quarter under review. At the end of the quarter, the company had about $8.7 billion remaining under the repurchase program approved in August 2021.A Sneak Peek Into TGT’s FY25 OutlookTarget expects net sales growth of around 1%, driven by flat comparable sales. The company also anticipates a slight improvement in its operating margin rate compared to full-year 2024, with GAAP and adjusted earnings per share projected between $8.80 and $9.80.Shares of Target have fallen 5.4% year to date against the industry’s growth of 6.2%.Don’t Miss These Solid BetsSprouts Farmers SFM, which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1 (Strong Buy). SFM has a trailing four-quarter earnings surprise of 15.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of 12.1% and 21.6%, respectively, from the year-ago reported numbers.Costco COST, which operates membership warehouses, carries a Zacks Rank #2 (Buy). COST has a trailing four-quarter earnings surprise of 2%, on average. The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings suggests growth of around 7.5% and 11.9%, respectively, from the year-ago reported numbers.Post Holdings POST, a consumer packaged goods holding company, currently carries a Zacks Rank #2. POST has a trailing four-quarter earnings surprise of 22.3%, on average. The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggests growth of 0.3% and 2.2%, respectively, from the year-ago reported numbers.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis Report Post Holdings, Inc. (POST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks